Residential Remodeling Outlook: Slight Gains in 2020
National spending for improvements and repairs on owner-occupied homes is expected to rise “only modestly” this year, according to the Leading Indicator of Remodeling Activity by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, Cambridge, Mass.
The LIRA projects home remodeling expenditures will increase by just 1.5 percent in 2020, compared to annual gains of 5-7 percent in recent years.
“While homebuilding and sales activity are now firming, softness from earlier last year will continue to pull on remodeling spending growth in 2020,” said Chris Herbert, Managing Director of the Joint Center for Housing Studies. “However, the slowdown should begin to moderate by year-end as today’s healthier housing market indicators will ultimately lead to more home renovation and repair.”
Abbe Will, Associate Project Director in the Remodeling Futures Program at the Center, noted a growth projection of less than 2 percent is “certainly lackluster” for the remodeling market, “especially given historical average annual growth of about 5 percent. Even so, homeowner improvement and repair expenditures are still set to expand this year to over $330 billion.”
In a more optimistic separate report, Buildfax, Austin, Texas, said its expects remodeling activity to continue to improve as more U.S. homeowners stay in their homes.
The December BuildFax Housing Health Report noted in 2019, the United States experienced the lowest rate of mobility, which monitors the pace at which people in the U.S. move domestically, since this metric was first tracked in 1947. Just 9.8% of U.S. residents moved in 2019 (for more information on this, see today’s MBA Chart of the Week above).
“However, as people decide to stay put for longer periods of time, it’s possible they’ll spend additional capital on their existing properties (for instance, larger maintenance projects),” the report said.
Buildfax said existing maintenance volume increased by 9.47 percent last year; spending increased by 16.26 percent year over year, respectively, “potentially fueled by homeowners who feel unable to buy a new home and therefore invest in their existing property.”